Kommersant: Belarus To Lose Another $ 1.6 Billion On Russian Oil

Dependence on Russian oil may hit Lukashenka stronger than before.

Ministry of Energy of Russia outlined a gloomy picture that would be the result of the zeroing of the crude oil export duty which the Ministry of Finance proposes to perform after 2018.

According to Kommersant, the Ministry of Energy notes, that this could complicate relations with Belarus, depriving it of 96 billion Russian rubles (with the current exchange rate it equals to $ 1.6 billion), it could also lead to a drop in oil refining volumes by 20% and fuel shortages, as well as to the closure of a number of Russian oil refineries.

The Ministry suggests that nothing should be changed at least until 2020, while the Ministry of Finance is eager to make a decision on this issue in 2018. Compensatory measures, such as negative excises, may become a compromise for the Russian participants of the market.

Today Belarus receives oil duty-free. The mineral extraction tax will grow after the zeroing of the duty, which is fraught with increase in oil prices for our country. When calculating the amount of the loss, the Ministry of Energy of the Russian Federation used the oil price of $ 40 per barrel and the exchange rate 64.8 Russian rubles per dollar.

However, the Ministry of Energy predicts serious consequences of the zeroing of duties for the domestic Russian market as well: the average refining margin may fall from 2.7 thousand rubles per ton to 1 thousand rubles. In a number of cases it would become less profitable to refine oil, than to export it.

Therefore, the Ministry of Energy expects the "simultaneous decrease in oil refining volumes" (up to 60 million tons). This equals to approximately 20% of all the oil refining volume in the Russian Federation. This would result in decline of fuel production (by 6 million tons for gasoline, 14 million tons for diesel), which would cause oil shortage in the domestic market and social problems caused by both the rising fuel prices and the fact that the oil companies would have to close unprofitable oil refineries.

The Ministry informed Kommersant, that "in line with the request of the president, which he has formulated in his message to the Federal Assembly," the future changes in the tax system should be discussed in 2017 with the parties concerned, in 2018 the corresponding laws should be adopted, which should enter into force from 2019. "That is why, we think that it's too early to consider the change of the duties, the MET and other taxes before the discussion of the future framework of the tax system is completed, as was instructed by the president," – the Ministry explained.